However, all is not lost, with new investors and private equity circling the space, plus increased desire from marketers to leverage data at scale currently prompting demand for new technologies.

According to a Results International report released today, 2018 saw “continued strong M&A activity” in the ad-tech and mar-tech space. Overall, 2018 saw a 4 percent year-over-year increase in deals in the marketing communications, or marcom, sector (an umbrella term that also includes advertising and media agencies plus design and build services).

However, report co-author and partner at Results International Julie Langley noted that M&A interest on the part of consultancy firms in such companies accounted for 23 deals in the marcom space during the year, 12 of which took place in the fourth quarter, including Accenture Interactive’s purchase of Adaptly.

A separate report by Forrester Research pointed to a decided slowdown in the appetite for VC in the sector with investment in the ad-tech and mar-tech space expected to drop markedly between 2018 and 2019. But Results International noted that almost a quarter of all marcom deals completed globally in 2018 were back by private equity, a 79 percent increase from 2017.

Commenting on the trend, Ana Milicevic, co-founder and principal at consultancy Sparrow Advisers, said companies with annual revenue in the range of $30 million to $100 million would likely prove an attractive offer for PE outfits looking to shore up an existing portfolio of point solutions.

“The key here is understanding if [an ad-tech company] is being acquired for their growth and potential or for their parts. … With a lot of ad tech M&A activity, it’s oftentimes unclear,” she said. “For instance, on the surface, a deal can look like something that’s great all round where everybody has made money but then a month later there’s massive layoffs. That would indicate that a deal is something like PE buying a company for scraps [such as the programmatic skill set of its employees].”

IPOs in the ad-tech and mar-tech space?

Results International’s report noted a limited number of initial public offerings in the marcom space in 2018. The authors added that many PE investments in ad tech are in anticipation of an IPO at a later date. However, the history of ad tech on the public markets is checkered with many ad-tech companies, such as Rocket Fuel, TubeMogul and Yume, having IPOs in the early part of the decade.